March 26, 2022

Financial Analysis and Reporting – Activity 6

Deadline March 27, 2022 at 5:00 pm
Send to occ.pintoronnel99@gmail.com
Please indicate your complete name, course and section on your activity and email message.

Identification

1. ________________ is a collection of analytical processes that are part of business analysis.

2. ________________ lend funds to a company in return for a promise of repayment with interest.
3. ________________ is a company’s ability to raise cash in the short term to meet its obligations.
4. ________________ is a company’s long run viability and ability to pay long-term obligations.
5. ________________ is the value of a company (or its stock) determined through fundamental
analysis without reference to its market value (or stock price).
6. ________________ is the evaluation of both a company’s business decisions and its success at
establishing a competitive advantage.
7. ________________ refers to the process of converting forecasts of future payoffs into an
estimate of company value.
8. ________________ measures a company’s financial performance over a period of time, typically
a year or a quarter.
9. ________________ is primarily used as a tool to evaluate the sources and uses of funds.
10. ________________ is “the magnitude of an omission or misstatement of accounting
information that, in the light of surrounding circumstances, makes it possible that the judgment
of a reasonable person relying on the information would be changed or influenced by the
omission or misstatement.”
11. ________________ involves reporting the least optimistic view when faced with uncertainty in
measurement.
12. earnings or profit is the net effects of a business’s operations during a given time period.
13. ________________ is the rate that the market assigns to the bond at the time of its issuance.
14. ________________ refers to the order in which different parties will be paid when a company’s
business is dissolved.
15. ________________ refers to assets that are set aside during dissolution to specifically satisfy a
particular claim.
16. ________________ is a contractual agreement between a lessor (owner) and a lessee (user).
17. ________________ are potential claims against a company’s resources due to future.
performance under contract.
18. ________________ are shares issued to equity holders in return for assets and services.
19. ________________ is a distribution of a company’s own shares to shareholders on a pro rata
basis.
20. ________________ include cash and other assets that are convertible to cash, usually within the
operating cycle of the company.
 21. ________________ are amounts due to the company that arise from the sale of products or
services, or from advances (loaning of money) to other companies.
22. ________________ are advance payments for services or goods not yet received.
23. ________________ are goods held for sale as part of a company’s normal business operations.
24. ________________ is defined as current replacement cost through either purchase or
reproduction.
25. ________________ is the process of deferring a cost that is incurred in the current period, but
whose benefits are expected to extend to one or more future periods.

Enumeration

Types of Creditor
1.
2.
3 Broad areas of Financial Analysis
3.
4.
5.
Monitoring and Enforcement Mechanisms
6.
7.
8.
9.
Limitation of Financial Statement Information
10.
11.
12.
Fundamental Principles of Accrual Process
13.
14.
Types of Income
15.
16.
17.
Components of Accounting Income
18.
19.
20.
Essay
1. Describe the importance of accounting analysis for financial analysis.
2. Who has the main responsibility for ensuring fair and accurate financial reporting by a
company?
3. How does a balance sheet analysis provide a check on the validity and quality of earnings?
4. Discuss how the lessee reflects the cost of leased equipment in the income statement for;
(a) assets leased under operating leases and
(b) assets leased under capital leases.

Restating Inventory from LIFO to FIFO

Refer to the financial statements of Campbell Soup Company.

Required:
a. Compute Year 10 cost of goods sold and gross profit under the FIFO method. (Note: At the end of Year
9, LIFO inventory is $816.0 million, and the excess of FIFO inventory over LIFO inventory is $88 million.)
b. Explain the potential usefulness of the LIFO to FIFO restatement in a.
c. Compute ending inventory under the FIFO method for both Years 10 and 11.
d. Explain why the FIFO inventory computation in c might be useful for analysis